The Cato Institute is a libertarianthink tank founded by Charles G. Koch and funded by the Koch brothers. It is headquartered in Washington, D.C. The Institute states that it favors policies "that are consistent with the traditional American principles of limited government, individual liberty, and peace."[1] Cato scholars conduct policy research on a broad range of public policy issues and produce books, studies, op-eds, and blog posts. They are also frequent guests in the media.

Where ideology and science part company, Cato favors ideology, as shown by an advertisement[2] published in newspapers in 2009 disputing the state of the science on climate change.[3]

The Cato Institute's articles of incorporation were filed in December 1974, with the name "Charles Koch Foundation," listing the original directors as Charles Koch, George Pearson, and Roger MacBride and the same address as Koch Industries in Wichita, Kansas.[4] The organization's application for recognition of exemption by the IRS, also filed in December 1974 -- by George Pearson -- anticipated founding contributions of $40,000 in cash from Charles Koch, the Fred C. Koch Trust, and potentially the Fred C. Koch Foundation, as well as 10,000 to 15,000 shares of non-voting common stock of Koch Industries, as well as potentially preferred stock (stock prices of the company at this time are unknown because it is a private corporation).[5]

In 1977, the Cato Institute took its current name and was headquartered in San Francisco with a staff of three and $500,000 in financial backing provided via Charles G. Koch, according to the Washington Post.[6]

The relationship between Edward H. Crane and the Kochs deteriorated in the early 1990s over Charles Koch's "market-based management" theories and the way Crane handled a Moscow conference, according to The Washingtonian.[7] According to a Washington Times report from January 13, 1992:

"Word is dribbling out of the CATO Institute that Charles Koch, the oil billionaire whose bucks have helped keep CATO's thinkers in the tank, has dropped off the board of directors. The situation was announced to staffers last Tuesday by Ed Crane. He told the troops that funding would not be curtailed. Through various pipelines, Mr. Koch is said to control about 60 percent of CATO's budget. Mr. Crane did apparently conclude his briefing on a less than upbeat note, explaining that he really didn't know what Mr. Koch's resignation meant and that it could indicate some hard times ahead."[8]

In 2008, the New Yorker reported that "between 1986 and 1993 the Koch family gave eleven million dollars to the [Cato] institute."[9]

2012 Litigation

In March 2012, the Kochs, who together controlled half of the Cato Institute through two of the organization's four quarter-share "shareholder" seats,[10] sued the Cato Institute to gain control of a third seat that had been held by a shareholder who died, which would have allowed the Kochs to further influence policy and management decisions within the organization.[11] At the time of the lawsuit's filing, Ed Crane released this written statement:

"Charles G. Koch has filed a lawsuit as part of an effort to gain control of the Cato Institute, which he co-founded with me in 1977. While Mr. Koch and entities controlled by him have supported the Cato Institute financially since that time, Mr. Koch and his affiliates have exercised no significant influence over the direction or management of the Cato Institute, or the work done here.[12]

Jane Mayer reported in The New Yorker that in June 2012, the Koch Brothers agreed to end their litigation in exchange for Ed Crane's retirement.[13] The lawsuit generated significant attention in the media, and Ed Crane stated in an interview with David Weigel for Slate that the lawsuit generated a significant decline in supportive scholars.[14]

Since the group's founding, the Koch family has donated more than $30 million dollars to the organization, according to the New York Times as of 2012.[15]

Controversies and Positions

The Cato Institute is named after "Cato's Letters," a series of libertarian pamphlets that Cato's founders claim "helped lay the philosophical foundation for the American Revolution."[16] Its stated mission is "to broaden the parameters of public policy debate to allow consideration of the traditional American principles of limited government, individual liberty, free markets, and peace" by seeking greater involvement of the "lay public in questions of public policy and the role of government."[16]

Anti-Tax Policies

The Cato Institute takes a position against taxation in general -- at the international, federal, state, and local levels.[17][18] Such policies cripple governments, sharing Grover Norquist's goal to "get [government] down to the size where we can drown it in the bathtub."[19]

Support for Privatizing Government Services

The Cato Institute pushes for privatization of government services, stating on its website, "Privatization has generally led to reduced costs, higher-quality services, and increased innovation in formerly moribund government industries."[20] The Center for Media and Democracy has called this push "a hostile takeover of our schools, roads, prisons, drinking water, and even government itself" and has pointed out the "eye-popping salaries" of the CEOs and executives of the for-profit firms engaged in such privatization and the "fine print follies" in privatization "contracts that put taxpayers on the hook -- even for work not done."[21]

Push for School Privatization

The Cato Institute takes a position against public schools, arguing that the country should "break up the long-standing government monopoly" and move "toward a competitive education market."[22][23][24][25] As noted in a report by the Center on Education Policy, "From the early days of the nation, public education has played a vital role in American democratic society.... American public schools have been expected to fulfill certain public missions[:] "1. To provide universal access to free education[;] 2. To guarantee equal opportunities for all children[;] 3. To unify a diverse population[;] 4. To prepare people for citizenship in a democratic society[;] 5. To prepare people to become economically self-sufficient[; and] 6. To improve social conditions schools, public and private.... Just because [some] individual public schools are not living up to these ideals, however, is no reason to abandon the ideals or the institution of public education. Some citizens point to the poor performance of some public schools as a reason to shift responsibility for education to the private sector.That was tried before, in the years preceding universal public education, and many children were left out."[26]

Support for Privatizing Water Resources

The Cato Institute claims that deregulation of water use will more effectively reduce scarcity than will government management. Jerry Taylor, the Director of Natural Resource Studies at Cato, alleges that water shortages are "the product of government mismanagement," and should therefore be "regulated" through the market. Terry argues that government regulation of water has kept water prices "artificially low -- about half the price of delivery on a national basis -- with over-consumption the inevitable result."[27] If water use were instead treated as a property right, Cato posits, it would create incentives for those holding the rights to use them efficiently and transfer the excess to others at a profit. Cato claims that market "regulation" of water use would lead to fewer problems with water scarcity. Critics point out that this market-based approach to water policy concentrates the right to use water in the hands of a few powerful people, who become even more powerful by controlling the public's use of something as essential as water. Privatization of water could also lead to corruption and loss of local authority, these critics fear.[28]

Support for Social Security Privatization

The Cato Institute has advocated privatizing Social Security since its first years. A chief early architect of Cato's thinking on private accounts was Peter J. Ferrara. The Washington Post's Thomas Edsall wrote in February 2005, "The emergence of the center-right phalanx backing the Social Security proposal is a major victory for the Cato Institute, a prominent libertarian group. In the late 1970s and early 1980s, Cato was almost alone in its willingness to challenge the legitimacy of the existing Social Security system, a politically sacrosanct retirement program. Recognizing the wariness of other conservatives to tackle Social Security, Cato in 1983 published an article calling for privatization of the system. The article argued that companies that stand to profit from privatization -- 'the banks, insurance companies and other institutions that will gain' -- had to be brought into alliance. Second, the article called for initiation of 'guerrilla warfare against both the current Social Security system and the coalition that supports it.'"[29]

Opposition to Wall Street Reform

The Cato Institute is opposed to Wall Street reform, calling the 2010 "Dodd-Frank Wall Street Reform and Consumer Protection Act" unconstitutional, saying that it "has implications for the separation of powers, the role of congressional oversight, vagueness and unfettered regulator discretion, and due process."[30]

In March 2007, Cato and the Institute for Justice called for eliminating disclosure requirements for those who contribute funds in support of or opposition to ballot measures. One of the primary reasons the two groups cited was the purportedly high costs associated with disclosure requirements, which are exponentially less than the amount spent on ads. At the time, these requirements were already weaker than those required for contributions to a candidate's political campaign.[33][34]

The Ballot Initiative Strategy Center (BISC), an advocacy group that supports ballot initiatives to reach progressive political and policy goals, posits that donor disclosure protects both the voters and the process of direct democracy from secret money and hidden goals. In response to Cato's position, Kristina Wilfore, BISC's executive director, stated, "The problem with being a front group for corporate fat cats like Exxon, Enron, and Howie Rich, is that you are always a little out-of-touch with the public… CATO aligning itself with more corruption in political giving is taking the side of the powerful against the people –- and they call themselves libertarian?"[33][35]

Amplification of Climate Change Denial

Cato Fellow Patrick Michaels Runs Climate Denial PR Firm

Patrick Michaels, a former professor of environmental sciences at the University of Virginia, is a senior fellow at the Cato Institute and an outspoken climate change denier. On its website, Michaels is listed as Cato's only speaker on climate change. (Three others are also listed in the "Energy and Environment" category -- Jerry Taylor on "gas and oil prices, energy policy, energy conservation and regulation", Peter Van Doren on "energy regulation, gas and oil prices," and Randal O'Toole on broader environmental policies.)[36]

In an affidavit in a Vermont court case, Michaels described the "mission" of the firm as being to "publicize findings on climate change and scientific and social perspectives that may not otherwise appear in the popular literature or media. This entails both response research and public commentary."[40] In effect, New Hope Environmental Services is a PR firm. Michaels' firm does not disclose who its clients are,[41] but in 2006 a leaked memo revealed that Michaels' firm had been paid $100,000 by an electric utility, Intermountain Rural Electric Association (IREA), to counter concern about global warming.[42] An affidavit by Michaels also stated that "public disclosure of a company's funding of New Hope and its employees has already caused considerable financial loss to New Hope. For example, in 2006 Tri-State Generation & Transmission Association, Inc., an electric utility, had requested that its support of $50,000 to New Hope be held confidential. After this support was inadvertently made public by another New Hope client, Tri-State informed me that it would no longer support New Hope because of adverse publicity."[40]

On a 2007 academic CV, Michaels disclosed that prior to creating his firm, he had received funding from the Edison Electric Institute -- an electric utility trade group -- and the Western Fuels Association -- an entity that provides coal and transportation services to electric utilities. He has also been a frequent speaker at events organized by leading coal and energy companies as well as coal and other industry lobby groups.[43]

In 2009, the Center for Media and Democracy's PRWatch noted that, "in its returns, Cato reports that since April 2006 it has paid $242,900 for the 'environmental policy' services of Michaels' firm. (In preceding years, New Hope Environmental Services was not listed amongst the five highest paid independent contractors supplying professional services to Cato.) In response to an email inquiry, Michaels stated that the Cato funding 'largely supported the extensive background research for my 2009 book, Climate of Extremes, background research on climate change, mainly in the areas of ice melt and temperature histories, and background research required for invited lectures around the world.' (Climate of Extremes was published by the Cato Institute in January of ... [2009].) Asked whether the funding came from a specific company, donor or foundation, Michaels wrote via email that there wasn't 'for this or for any of my activities.' (In case the Cato Institute knew of dedicated funding sources for Michaels work that he was unaware of, I also emailed an inquiry to the think tank's media office. They did not respond.)"[44]

Alliance with the Tobacco Industry

The Cato Institute appears on several Philip Morris lists of "national allies," including a 1999 "Federal Government Affairs Tobacco Allies Notebook"[45] and a less-specific 2000 list of "National Allies."[46]

R.J. Reynolds (RJR) also names Cato Institute as an organization the company could rely upon to help the tobacco industry "shift the debate and framework under which cigarette-related issues are evaluated in the future." In the September 2000 document, titled "Reframing the Debate Communications Plan," RJR states, "Work with CATO Institute ... to empanel a group to debate legality and future management of cigarette industry. Open forum to media (pitch C- SPAN coverage); issue press release and transcript of remarks to media not in attendance." A subsequent part of the plan says RJR could help sustain public interest in their points of view by encouraging Cato Institute to send [pro-tobacco] columns to the national media.[47]

Objection to Cigarette Taxes

Cato "scholars" have raised a number of objections to cigarette taxes. Such taxes are frequently justified by the claim that smokers impose unfairly high costs on society. In a January 10, 1998, commentary published in the Chicago Tribune, Cato Institute Assistant Director of Environmental Studies Peter Van Doren claimed that smokers' premature deaths actually save taxpayers money, calling into question the fairness of imposing ever-higher tobacco taxes on them. Van Doren also claimed that high tobacco taxes are highly regressive, noting that smokers tend to be disproportionately poor and minority.[48]

Robert A. Levy, an independently wealthy businessman who became a senior fellow at the Cato Institute in his 50s,[49] has published numerous editorials criticizing higher tobacco taxes, lawsuits against the Tobacco Institute, and other anti-smoking policies. In one 1999 piece written with Cato fellow Rosalind B. Marimont and published in the Cato magazine Regulation, Levy acknowledged that smoking was a serious health problem but argued that the common estimates of 400,000 smoking-related deaths each year exaggerated the magnitude of the problem.[50] In another 1999 piece published in the Wall Street Journal, Levy decried the Clinton administration's Department of Justice lawsuit against tobacco companies to recoup the federal government's cost for treating sick smokers.[51]

Cato has also criticized the 1998 Master Settlement Agreement (MSA) that 46 U.S. states signed with the tobacco industry.[52] For example, Levy argued that the 1998 MSA, which he claimed effectively created a government-run tobacco cartel for the benefit of large tobacco companies, created a situation in which tobacco companies no longer need worry about new competitors pushing down tobacco prices.[53] He pointed out that the four largest tobacco companies have managed to maintain a 96 percent market share despite the costs of the settlement and called the agreement a "sweetheart deal" between state attorneys general and the tobacco industry.

Claims that "Secondhand Smoke Risks Are Debatable"

Cato staffer Radley Balko testified before the Washington, D.C. City Council in opposition to clean indoor air laws in 2005, arguing that smoking restrictions infringe on the liberty of business owners to decide what policies they wish to adopt for their restaurants, as well as the freedom of smokers. In his testimony, Balko claimed that "the health risks associated with secondhand smoke are debatable." Balko argued that employees worried about the impact of smoking on their health should work elsewhere: "A waiter or bartender who chooses to work for an establishment that allows smoking knows what kind of environment he'll be working in," he stated. As for non-smokers rights, Balko argued that "you don't have the right to walk onto someone else's property, demand to be served food or drink someone else has bought, and demand that they serve you on your terms. Free societies don't work that way," he stated.[54] In his testimony, Balko did not disclose that the Cato Institute received funding from both R.J. Reynolds Tobacco Company and Altria, the parent company of Philip Morris.[54] (If true, this would beg the question of why higher rates of cardiovascular disease are attributed to non-smokers who worked in the service industry workers or as flight attendants -- before smoking policies were changed -- than other non-smokers.)[55][56]U.S. Centers for Disease Control and Prevention, Vital Signs: Nonsmokers' Exposure to Secondhand Smoke --- United States, 1999--2008, government agency report, September 10, 2010.</ref>[57][58]

Criticism of the Executive Branch on Civil Liberties

Cato has characterized the Bush administration's encroachments on individual rights as being the actions of an "intrusive federal government."[59] A little over a month after the September 11 terrorist attacks on the U.S., the Cato Institute republished an adapted version of an article by Charlotte Twight cautioning against proposals by then-Attorney General Ashcroft for greater government surveillance powers.[60] In the months after the September 11 attacks, Cato scholars wrote several articles criticizing the Patriot Act and other previous attacks on civil liberties.[61][62][63]

Timothy Lynch, the director of the Cato Institute's Project on Criminal Justice, testified before Congress in December 2001 in opposition to an executive order signed by President Bush on government detention of suspected terrorists. A few months later, Lynch cautioned that "to assuage the wide-spread anxiety of the populace, policymakers make the dubious claim that they can prevent terrorism by curtailing the privacy and civil liberties of the people."[64]

Perhaps the most comprehensive response by the Cato Institute on this topic is the May 2006 report by Lynch and Cato senior editor Gene Healy on the Bush administration's abuse of power.[65]

Support for Bush's Civil Liberties Restrictions

However, Cato's Roger Pilon has endorsed some of the Bush administration's moves to restrict civil liberties as part of the war on terror, sparking disagreement from other Cato scholars. For example, the Institute sponsored a debate[66] on the Bush administration's domestic wiretapping program, with Cato senior fellow Robert Levy representing the traditional libertarian stance in favor of civil liberties.

Work with the ACLU

Cato has also worked on occasion with the American Civil Liberties Union. For example, Nadine Strossen, the president of its board, contributed a chapter to a 2000 book on President Clinton's civil liberties record,[67] and she delivered the B. Kenneth Simon Lecture at Cato's 2005 Constitution Day event, a speech that was subsequently published in Cato's Supreme Court Review.[68]

Support for Gay Marriage and Sexual Privacy

In 2006, the Cato Institute published a report on the Federal Marriage Amendment, which would have outlawed gay marriage, titled "Unnecessary, Anti-Federalist, and Anti-Democratic."[69] A Cato amicus brief was cited by the Supreme Court when it struck down sodomy laws in the case of Lawrence v. Texas.[70]

Support for Legalizing Marijuana

Cato staffers and scholars have called for legalization of currently controlled substances such as marijuana on the grounds that the "war on drugs" does not work, is expensive, causes crime, is used as an excuse to reduce civil liberties and to pursue overly aggressive policies abroad, and infringes on the principle of personal liberty.[71] The Cato Handbook, which typically represents a consensus view that the Institute as a whole wants to put its political weight behind, suggests that "Congress should repeal the Controlled Substances Act of 1970, repeal the federal mandatory minimum sentences and the mandatory sentencing guidelines, direct the administration not to interfere with the implementation of state initiatives that allow for the medical use of marijuana, and shut down the Drug Enforcement Administration."[72]

In its 2006 Annual Report, the Cato Institute lists the Marijuana Policy Project as a foundation funder, although the amount and purpose of the funding is unspecified.[73]

Support for Liberalizing Immigration

Cato staff have angered some conservative activists by strongly advocating for the liberalization of immigration laws.[74][75] The Cato Handbook calls for expanded immigration quotas and new visa programs for low-skilled as well as high-skilled workers, and for allowing more refugees to enter.[76] The handbook speaks approvingly of a policy of "immigration yes, welfare no" that resolves the tension between low-skilled immigration and the welfare state not by keeping immigrants out, but by letting them in and making them "ineligible for public assistance." It also characterizes the issues of "immigrant welfare use" as "often overstated."[76]

Support for Limited Government

In the preamble to its 2006 annual report, Cato's former President and CEO, Edward H. Crane and late former Chairman, William A. Niskanen, argued for a limited role of government: "The list of reasons why it is not smart to turn to government to solve social and economic problems is, if not endless, extensive. Yet, despite a truly horrendous record over the decades, the politicians of both major parties reflexively assume that the state is the proper vehicle for solving problems," they wrote. Crane and Niskanen describe Cato as embodying a "classical liberal/libertarian philosophy."[77]

Ideology

Cato has close ties with elements of the Republican Party, but it has often been critical of Republican officeholders -- especially President George W. Bush. Cato scholars criticized the 2003 decision by U.S. President George W. Bush to go to war with Iraq, prosecution of the war on drugs, giving federal money to faith-based organizations, and the decision of President George H.W. Bush to fight the first Gulf war.

The Cato Institute has argued repeatedly against the Republican party on bipartisan spending.[78][79][80][81] It has strongly criticized President Barack Obama's stimulus legislation and his health care law.[82] Cato scholars have also criticized President Obama for escalating the war in Afghanistan and for continuing Bush-era civil liberties abuses.[83]

Finances and Funding

During its 2012 fiscal year (April 1, 2012 through March 31, 2013), the Cato Institute reported $22,006,365 in total revenue; $26,028,845 in total expenses; and $58,731,695 in net assets.[84]

In their 1996 book No Mercy, University of Colorado Law School scholars Jean Stefancic and Richard Delgado describe a shift in Cato's patron base over the years. "Early on," they wrote, "Cato's bills were largely paid by the Koch family of Wichita, Kansas. Today, most of its financial support is from entrepreneurs, securities and commodities traders, and corporations such as oil and gas companies, Federal Express, and Philip Morris that abhor government regulation."[93]Koch Industries amassed most of its fortune in oil trading and refining.[94] However, it is not clear what proportion of Cato's current revenue is provided by the Koch family fortune.

Cato Funds 25+ "Like-Minded" Think Tanks

Aside from its own advocacy efforts, the Cato Institute has become a substantial funder of other "like-minded" think tanks around the U.S.

Personnel

John Allison, former chairman of BB&T Bank, replaced Ed Crane as CEO in 2012.[96]

A June 2012 article in New York Magazine discussed how the appointment of a former banking chairman is consistent with the trend in the libertarian movement to focus less on social issues in order to remain consistent with the G.O.P platform:

"Allison's ascension is in keeping with the general trend of the Washington libertarian movement to define itself mainly in economic terms. (The trend has been opposed by a handful of libertarian dissidents, the most prominent of whom have been purged.)"[96]

↑Jane Mayer (2010-09-30). The Billionaire Koch Brothers' War Against Obama. The New Yorker. Retrieved on 2011-10-30. “When President Obama, in a 2008 speech, described the science on global warming as "beyond dispute," the Cato Institute took out a full-page ad in the Times to contradict him. Cato's resident scholars have relentlessly criticized political attempts to stop global warming as expensive, ineffective, and unnecessary. Ed Crane, the Cato Institute's founder and president, told me that "global-warming theories give the government more control of the economy." Cato scholars have been particularly energetic in promoting the Climategate scandal.”